BHP, Exxon to spend $1b on Bass Strait gas

The gas boom is not confined to Australia's northern states, with BHP Billiton and ExxonMobil confirming they will spend $1 billion on gas infrastructure attached to their existing Bass Strait operations.

The two companies, through their 50/50 joint venture, will spend the money on a new gas "conditioning plant" that will treat the new sources of gas that are about to flow into their existing plant at Longford in Victoria.

The new gas will flow from three new gas fields - known as Kipper, Tuna and Turrum - in Bass Strait that are being tapped under a $4.4 billion project.

Gas in those fields has a higher level of carbon dioxide than the gas that has traditionally been processed at Longford, meaning the new "conditioning plant" is needed for pre-treatment.

The new fields also contain abnormally high amounts of mercury, and engineers have spent the past two years trying to develop ways of reducing the mercury content.

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Further spending on mercury mitigation is likely to be needed in coming months.

Gas consumption in Australia is expected to increase significantly in coming years, and the spending is part of Exxon and BHP's plan to supply greater quantities of that gas.

"Australian energy consumption will continue to grow during the next 20 years," said John Dashwood, the chairman of Exxon's Australian operations.

"The gas conditioning plant will process gas to help meet this expected increase in demand." The companies expect to be selling gas from the new fields by 2016.